Bear of the Day: Ralph Lauren (RL) - Bear of the Day

Loading...
Loading...
The steady decline in shares of
Ralph LaurenRL
has had a single, constant precedent in 2014: steadily declining EPS estimates. Followers of the Zacks Rank know this because the stock has earned either a #4 Sell or #5 Strong Sell Rank consistently all year.

I doubt that RL branded fashion has lost much appeal among its affluent devotees. But maybe some competition from Michael Kors KORS has nibbled away at the franchise. I won't speculate further on the business of RL, suffice to say I have been a KORS investor for over a year now for their global growth opportunities.

Here's a visual on the analyst downward estimate revisions courtesy of the Zacks proprietary Price & Consensus chart. I looked back at the historical Rank from 2013 and there were many months where the stock held the #4 or #5 Rank on either side of its zenith near $190 warning investors that the growth momentum was slowing.

You can see that 2015 EPS estimates were once near $11 and have slipped below $10. To be fair, that still represents 14% growth from the current year which is struggling for 3% growth. What you don't see is the 200-day moving average all the way up near $163 defining the steady downtrend as it slopes lower.

RL may be a value now to some investors at 17.5X next year's $9.92 consensus. But, of course, those estimates are always in danger of coming down further. When they start getting revised higher, the Zacks Rank will tell you. Until then, it's probably best to stay on the sidelines with this gentleman of fashion.

Disclosure: I own shares of KORS for the Zacks Follow the Money Portfolio.

Kevin Cook is a Senior Stock Strategist for Zacks where he runs the Follow The Money portfolio.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
RALPH LAUREN CP RL: Free Stock Analysis Report
 
MICHAEL KORS KORS: Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Loading...
Loading...
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...